They assert that these strategic moves create a leap in value for the company, its buyers, the book presents analytical frameworks and tools to foster an organizations ability to systematically create and capture blue oceans.
Operational Effectiveness Is Not Strategy According to Porter, various management tools like total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, that are used today, do enhance and dramatically improve the operational effectiveness of a company but fail to provide the company with sustainable profitability.
Thus, the root cause of the problem seems to be failure of management to distinguish between operational effectiveness and strategy: Management tools have taken the place of strategy. Necessary but Not Sufficient Although both operational effectiveness and strategy are necessary for the superior performance of an organization, they operate in different ways.
Performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to many practices that allow a company to better utilize its inputs. Porter states that a company can outperform rivals only if it can establish a difference it can preserve.
It must deliver greater value to customers or create comparable value at a lower cost, or do both. However, Porter argues that most companies today compete on the basis of operational effectiveness. This concept of competition based on operational effectiveness is illustrated via the productivity frontier, depicted in the figure below.
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The productivity frontier is the sum of all existing best practices at any given time or the maximum value that a company can create at a given cost, using the best available technologies, skills, management techniques, and purchased inputs.
Thus, when a company improves its operational effectiveness, it moves toward the frontier. The frontier is constantly shifting outward as new technologies and management approaches are developed and as new inputs become available.
To keep up with the continuous shifts in the productivity frontier, managers have adopted techniques like continuous improvement, empowerment, learning organization, etc.
Although companies improve on multiple dimensions of performance at the same time as they move toward the frontier, most of them fail to compete successfully on the basis of operational effectiveness over an extended period.
The reason for this being that competitors are quickly able to imitate best practices like management techniques, new technologies, input improvements, etc.
Thus, competition based on operational effectiveness shifts the frontier outward and effectively raises the bar for everyone.
But such competition only produces absolute improvement in operational effectiveness and no relative improvement for anyone. Such competition can be witnessed in Japanese companies, which started the global revolution in operational effectiveness in the s and s.
Strategy Rests on Unique Activities "Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value" p.
Moreover, the essence of strategy, according to Porter, is choosing to perform activities differently than rivals. Strategy is the creation of a unique and valuable position, involving a different set of activities.
The Origins of Strategic Positions Strategic positions emerge from three sources, which are not mutually exclusive and often overlap.
It is based on the choice of product or service varieties rather than customer segments. Thus, for most customers, this type of positioning will only meet a subset of their needs.How Strategy Shapes Structure Outlines: Introduction What Is the Right Strategic Approach for You?
The Three Strategy Propositions. Achieving Blue Ocean Strategy Alignment. When Strategy Is Not Aligned. Comic Relief’s Alignment of the Three Strategy Propositions. The Leadership Challenge. An organizational chart (often called organization chart, org chart, organigram(me), or organogram) is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.
The term is also used for similar diagrams, for example ones showing the different elements of a field of . Complexity characterises the behaviour of a system or model whose components interact in multiple ways and follow local rules, meaning there is no reasonable higher instruction to define the various possible interactions..
The term is generally used to characterize something with many parts where those parts interact with each other in multiple ways, . Describe the structure of a supply chain and the factors that affect its design. though, systems are set-up to deliver transactional or summary information, but not give an overall view of specific types of related activities.
This case describes the six areas for focus in a supply chain audit as supply chain strategy, structure of the. Design and planning resource for classroom teachers, instructional designers, and professors of education.
The glossary lists, describes, and provides links for over educational strategies, theories, and activities. Jan 16, · Overall, the article How Strategy Shapes Structure is a must-read material especially for marketing educators and practitioners.
The authors are commendable for treating the subject matter as neutral as possible in the following respects.